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France Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Dec 2011, Pages: 92
Business Monitor International's France Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on France's pharmaceuticals and healthcare industry.
BMI View:
Despite the government’s focus on fiscal consolidation – which includes various costcontainment measures impacting the country’s healthcare and pharmaceutical spending – France will remain one of the most attractive pharmaceutical markets on a global scale. High usage of (especially patented) medicines on a per capita basis will continue to provide considerable commercial opportunities for multinational drugmakers. While generic drugs will continue to increase their share of the total market’s value in the medium term, patented medicines are still expected to represent at least two-thirds the market by 2015, at a consumer price value of a significant EUR18.1bn (US$22.6bn).
Headline Expenditure Projections:
- Pharmaceuticals: EUR30.00bn (US$39.79bn) in 2010 to EUR29.62bn (US$42.36bn) in 2011; -1.3% in local currency terms and +6.5% in US dollar terms. Forecasts unchanged from Q411.
- Healthcare: EUR228.90bn (US$303.63bn) in 2010 to EUR235.56bn (US$336.85bn) in 2011; +2.9% in local currency terms and +10.9% in US dollar terms. Forecasts slightly up from Q411 on account of macroeconomic data.
- Medical devices: EUR10.13bn (US$13.43bn) in 2010 to EUR10.42bn (US$14.90bn) in 2011; +2.9% in local currency terms and +10.9% in US dollar terms. Forecasts unchanged from Q411.
Business Environment Rating:
France scores some 1.2% higher quarter-on-quarter (q-o-q) in BMI’s Q112 Business Environment Ratings (BERs), now ranking third out of the ten countries surveyed within the Western Europe region. Nevertheless, its risks profile remains considerably stronger than its potential draws in terms of rewards, indicating the pressures posed by various cost-containment initiatives and also due to the expected economic slowdown.
Key Trends & Developments
- Following cost-containment measures rolled out in 2010 and 2011, the authorities are poised to introduce further austerities in 2012. Proposed measures include savings of EUR910mn (US$1.23bn) achieved via price cuts on (mostly) generic medicines, and savings of EUR40mn (US$54mn) in reimbursement listings. The proposal sets the target annual growth in public expenditure on healthcare at 2.5% (from the previously proposed 2.8%) for each year from 2012 to 2015, which could see the pharmaceuticals industry more than EUR1bn worse off.
- In October 2011, French pharmaceutical companies Servier and Hybrigenics signed a threeyear deal in the field of deubiquitinating enzymes to research first-in-class medicines to treat several diseases, particularly cancer. Under the licence and research collaboration agreement, Hybrigenics will get EUR4mn (US$5.5mn) from an upfront fee and research funding, along with royalties on sales of diagnostic kits and EUR9.5mn (US$13.07mn) for each target successfully leading to registration.
- Leading domestic drug producer Sanofi is expecting average annual growth of 5% from 2012- 2015, according to recent reports. The company aims to shift into new areas, including vaccines and animal health as sales of drugs like bloodthinner Plavix (clopidogrel) and cancer drug Taxotere (docetaxel) are declining following the loss of patent protection. The company is also looking for extra cost savings of EUR2bn (US$2.8bn), as well as improving research and development capabilities to encourage sustainable growth.
BMI Economic View:
BMI envisages French growth continuing to slow heading into 2012 on account of a deteriorating macroeconomic backdrop, heightened pressures on domestic banks, and the need for tighter fiscal policy next year. As a result, BMI sees growth falling to 1.4% in 2012 (down from the original 1.7%), from 1.8% in 2011. BMI also notes that risks to these forecasts exist firmly to the downside given that any solution to the eurozone sovereign debt crisis comes fraught with implementation risks. In the meantime, given the weaker growth outlook facing the eurozone, and the potential need for a recapitalization of the domestic banking sector in light of a Greek debt default, BMI believes that pressure on the French government to cut the budget deficit will continue to mount, which will also impact healthcare.
BMI Political View:
As presidential elections loom in April/May 2012, the government will be loath to implement further significant tightening at this juncture, particularly given the inherent weakness in the domestic economy. Irrespective of who wins the elections, BMI sees little room for the new government to ease back on the government's current fiscal austerity plans that will continue into 2012. However, BMI stresses that a failure to adequately address the government's fiscal and debt burdens risks the country losing its coveted AAA-credit rating, which in turn would likely see the borrowing costs rise, rendering any fiscal consolidation even harder to achieve.
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